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Fast-Growing Asia Video Market Awaits Arrival of Disney Plus and Apple

Asia’s over-the-top video streaming market is growing so strongly that there is currently room for a wide variety of business models. Local companies have many of the most compelling success stories, but the global players have found plenty to chew on too, and competition is expected to increase with Disney and Apple launches starting from later this year.

Online video revenue in Asia Pacific is set to increase by 24% in 2019, reaching $27 billion of advertising and subscription revenue, according to the latest forecasts from consultancy and research house, Media Partners Asia. According forecasts contained in the firm’s new Asia Pacific Online Video & Broadband Distribution 2020 report, that total will continue to grow by 13% annually, to reach $50 billion by 2024. Growth is stimulated by a combination of rising investment and competition, better broadband access and development of local content, payment infrastructure and IP protection.

The report shows China to be far and away the largest video market in Asia, representing 59% of OTT advertising and subscription revenue in Asia Pacific this year. It is dominated by a trio of national players iQIYI, Tencent Video and Youku, though their oligopoly is being challenged by short-form specialist Bytedance. All four companies are increasingly looking abroad for expansion.

Excluding China, APAC’s largest online video geographies by revenue are: Japan; Australia & New Zealand; India; Korea; Taiwan; and Thailand, with Indonesia set to overtake Thailand by 2024. Online video revenues in APAC ex-China are forecast to grow from $11 billion in 2019 to $23 billion by 2024, a 16% annual growth rate.

Advertising-supported business models are expected to continue to hold their leadership over the next five years, especially outside China. That makes Google-owned YouTube the leading OTT player in Asia by revenue, ahead of the four Chinese players. Netflix ranks sixth, Amazon Prime seventh and Disney-owned Hotstar, in India, in eighth.

Outside of China, Amazon, Netflix and YouTube will account for 54% of Asia’s online video advertising and subscription revenues this year. YouTube continues to grow consumption and advertising, benefiting from a blend of data and technology. Netflix will have an estimated 13.2 million paying subscriptions by year-end 2019, with revenues topping $1.3 billion. It experienced significant growth in Australia, New Zealand, Japan and Korea during the course of 2019. Netflix passed 1 million subs in India in 2018 and introduced a mobile only pricing plan this year.

Amazon has made significant progress in India and Japan, and is showing growth in Australia, where it has invested in local content for its Prime Video service, complementing the growth of other Amazon services, including TVOD, Amazon Channels and FireTV.

Disney Plus will launch in Australia in Nov. 2019 at a competitive price point of A$8.99 ($6.7) per month. In 2020, Disney Plus is expected to launch in Japan, a market in which a similar Disney Deluxe service exists today. In 2021, new entry markets for Disney Plus will likely include Southeast Asia, Hong Kong, Japan, Korea and Taiwan. It remains unclear whether Disney Plus will be launched in India, or whether Hotstar will be allowed to remain dominant.

Hotstar is a fast-growing number two platform across both advertising and subscription, lifted by access to IPL cricket, demand for catch-up content from Star India, its direct owner, as well as access to premium Hollywood entertainment. The report estimates that Hotstar will account for more than 20% of online video advertising in India this year, while its low-ARPU subscription model has now attracted a critical mass of customers.

Apple TV Plus will launch globally in Nov. in 100 markets, expected to include Australia, New Zealand, India, Japan, Korea and Southeast Asia

Despite the incursion of English-language global giants, Australia’s Stan has been a strong local success. It reported 1.7 million active subs in June 2019, with MPA estimating paying subscriptions at 1.4 million. In its  financial year to June 2019, Stan grew revenues by 62%, ahead of a 23% increase in costs, allowing the company to be cash flow positive for the first time.

In Korea, a reshaping of the industry is already under way. Joint venture, Pooq has merged with SKT-owned Oksusu and the new entity branded Wavve. The new platform is 30% owned by SKT and 70% held by the consortium of free-to-air networks SBS, MBC and KBS. Wavve will leverage popular catch-up content, supplemented with original drama productions. It may also include a freemium layer to drive AVoD consumption.

In Southeast Asia, powerful and popular IP is moving from broadcast TV to online, with SVoD and AVoD business models. TVB has done so successfully in Hong Kong. ABS-CBN’s iWant has started to grow in the Philippines, while SCMA’s Vidio and MNC Group’s RCTI Plus are emerging in Indonesia.

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